UK to cap business energy bills

The scheme will run for six months and will start in October

Big Zero Report 2022

The government has today announced that business energy bills are to be capped.

Officials have unveiled details of the much-anticipated package designed to help businesses that are currently on different types of contracts.

More specifically:

  • Businesses on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1st April. Their energy costs will automatically be reduced by the relevant p/kWh for the duration of the scheme. Customers entering new fixed price contracts after 1st October will receive support on the same basis.
  • Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the supported price and the average expected wholesale price over the period of the scheme. The amount of this “maximum discount” is likely to be around £405/MWh for electricity and £115/MWh for gas.
  • For businesses on flexible purchase contracts, typically some of the largest energy-intensive businesses, the level of reduction offered will be calculated by suppliers according to the specifics of that company’s contract and will also be subject to the “maximum discount”.

Prime Minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.

“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.

“At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”

Business Secretary Jacob Rees-Mogg said: “We have seen an unprecedented rise in energy prices, following Putin’s illegal war in Ukraine, which has affected consumers up and down the country and businesses of all sizes.”

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